Nicor's proposed increase under fire

Would be first rate increase since 1996

Nicor Gas's first proposed rate increase in nearly a decade has come under fire by a leading consumer watchdog group and Illinois' attorney general who say the hike is unwarranted.

In November, the regulated monopoly asked the Illinois Commerce Commission to allow it to impose a 16.5%, $83 million rate increase on its two million customers across northern Illinois. By Nicor's calculation, the average household would pay an added $26 a year under the plan.

It would be Nicor's first rate hike since 1996, said company spokesman Don Ingle, and even afterward Nicor's customers would still enjoy the lowest gas rates in the state.

But the Citizens Utility Board, the Illinois consumer group, argues that Nicor has inflated its rate request and should in fact reduce rates by $15 million instead.

Illinois Attorney General Lisa Madigan agreed with CUB that rates should dip by roughly about $5 per average household.

"The numbers speak for themselves: Nicor Gas' prices for its customers should be headed in a downward direction, not the opposite," Madigan said in a statement. "The bottom line is that when all factors are considered, Nicor Gas cannot justify an increase."

Among CUB's allegations: Nicor is improperly trying to pass along the costs of a former rate plan in which Nicor sold off cheap gas and replaced it with more expensive gas. That program, called performance base rates, is also under ICC investigation.

"They are far from deserving a rate increase," said CUB executive director Martin Cohen. "Actually, they should be in line for a rate cut."

But Ingle said the performance based rate plan and the current request are unrelated.

"It has no bearing on the rate case," he said.

Cohen's was one of several parties that filed written testimony with the ICC, a commission spokeswoman said. Commission staff recommendations, also filed Tuesday, were not immediately available.

After hearings this spring, the commission is expected to take action on the rate request by October.